Question

Discuss the factors that contribute to the reliability of a forecast.

Answer 1

There are different factors that affect the reliability of the forecast. The first such factor is a seasonality factor present in the data that is used for forecasting. A reliable forecast must be based upon the data that is de-seasonalised. The second factor is the latest trends and perception among the target audience for that forecast is being done. A good and reliable forecast considers these trends and reflect it into the forecast to make it more reliable. The third factor is consideration of experts view if forecast is quantitative. It gives higher level of credibility and reliability when experts' view are added to the forecast. The fourth factor is the consumers' expectation towards the economic outlook. If the expectation is good, then forecast can be aggressive. If expectations are poor, then forecast should be discounted.

Besides, factors like, genuine collection of data, authentic sources to collect the  data as well as the right set of tools used for the forecasting are also the factors that affect reliability of the forecast.